Message Mixed From Factories in China

By REUTERS

February 1, 2013

BEIJING — Asian manufacturers face a challenging business climate in the coming months, surveys released Friday suggested, with China’s huge factory sector managing only a shallow rebound at the start of 2013 as feeble foreign demand dragged on sales.

Two surveys of Chinese factory purchasing managers showed that industrial output in the world’s fastest-growing major economy rose in January but that the pace of the rebound in activity was uneven.

China’s official purchasing managers’ index, or P.M.I., released by the government’s statistics bureau, showed that factory output had grown more slowly than expected in January, with a reading of 50.4 points, easing from 50.6 in December and below a forecast for a nine-month high of 50.9.

The official P.M.I. has been above 50 points, the level that separates growth from contraction, since last August, though its failure to break above 51 indicates that the economic expansion it signals is moderate.

The Chinese factory P.M.I. from the British bank HSBC, which is more focused on smaller, privately held businesses than its official counterpart, rose to a two-year high of 52.3. HSBC’s preliminary figure for the month, released Jan. 24, had put the measure at 51.9.

Trade prospects in China, the world’s biggest exporter, appeared darker than those elsewhere. The manufacturing reports showed that export orders either grew marginally or shrank in January as shoppers in the United States and Europe, the two biggest buyers of Chinese goods, cut back spending.

Domestic demand, on the other hand, was the main force behind China’s gentle economic rebound, driving growth in new orders in January to the highest in several months. The official P.M.I. showed growth in new orders at a nine-month high of 51.6, while the same measure in the HSBC survey climbed to a two-year high of 53.7.

However, price pressures were shown to be building in China, with the both surveys indicating input prices at their highest since mid-2011.

“January’s P.M.I. does raise some red flags about the state of the economy,” Alistair Thornton, an economist at IHS Global Insight in Beijing, said in reference to the Chinese economy. “Things look a little shaky.”

The patchy nature of the recovery on Chinese factory floors was repeated in other P.M.I.’s released across Asia.

Surveys showed that manufacturing output had slowed or declined in India and South Korea. Factories in Indonesia, the star emerging economy of the past year, experienced a decline in business in January for the first time in eight months, while manufacturers in Taiwan reported the fastest growth in 10 months.

Indonesian manufacturers said they had received more orders from abroad, but output at factories there still declined for the first time since last May. The P.M.I. retreated to 49.7 in January from 50.7 in December as domestic demand in the Indonesian economy, Southeast Asia’s largest, dragged.

“Strong export orders appear to have offset a moderation in domestic orders, which may have been partially impacted by the Jakarta floods,” said Su Sian Lim, an economist at HSBC, referring to widespread flooding in the Indonesian capital last month.

In Taiwan, the P.M.I. reached a 10-month high of 51.5 as factories raised output markedly. In South Korea, factories reported their first growth in export orders in eight months, but the P.M.I. edged down to a seasonally adjusted 49.9 in January from 50.1 in December.

The data released Friday showed that India was as vulnerable as China to an export slump, especially as demand from Europe crumbled. Growth in Indian factory output eased to a three-month low of 53.2 in January, retreating from the six-month high in December of 54.7 as new export orders slowed.

“The growth momentum in the manufacturing sector eased in January as a slower expansion in new orders slowed output growth,” Leif Eskesen, an economist at HSBC, said of the Indian purchasing managers’ survey.